Canada's housing chief says no evidence of widespread mortgage fraud

Thu Jun 1, 2017 3:52pm EDT
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By Matt Scuffham

TORONTO (Reuters) - The head of Canada's housing agency, whose responsibilities include maintaining the stability of the country's housing market, said on Thursday there was no evidence of widespread fraud in Canada's mortgage industry.

Home Capital, one of Canada's biggest mortgage lenders, has scaled back on lending to focus on repairing its balance sheet following rapid deposit withdrawals after a management shake-up and accusations brought by a regional regulator that it had misled investors about its mortgage business. The company has said the accusations are without merit.

"There is not evidence that fraud is a widespread problem within the industry but we know it happens. It's very hard to find and incentives exist for frauding the system so we need to be vigilant," Evan Siddall, chief executive of Canada Mortgage and Housing Corp (CMHC) told reporters.

"We don't think this is a pervasive problem in Canada. It is a discreet issue," he added.

CMHC is responsible for insuring the bulk of Canadian mortgages issued by banks and other big lenders.

Steve Mennill, senior vice president, insurance at CMHC said it had seen "no unusual level of defaults associated with Home Capital."

Siddall said the CMHC is working with the Canadian Bankers Association to get more data on how much lending is being done by lenders not regulated by Canada's main financial regulator.

Reuters reported on Wednesday that Home Capital's problems were pushing more borrowers toward less regulated mortgage providers, raising the risks for them and the wider property market.   Continued...

A sign advertises a condominium development on a lot in Toronto, Ontario, Canada October 3, 2016. REUTERS/Chris Helgren